ESPN and NFL Monday Night Football contract:
$15.2 Billion
Yep, 15.2 billion reasons why ESPN will polish the NFL's apple regardless of the sliminess of it.
But there maybe good news for those of us who would like to see ESPN get their just desserts.
I don't think many people know ESPN is considered the third most valuable MEDIA company there is (based on revenue estimates -- the ESPN estimate is 60 billion). They are considered much more valuable than another of Disney's networks, ABC. Even though ABC has many many more total viewers throughout a program day, ABC's valuation is a paltry 3.2 billion. If ESPN was a standalone publicly traded company, that 60 billion would make it within the 80 most valuable companies on Wall Street, in the top 20% of the fortune 500. So why does this extremely valuable media company kowtow to the NFL much less anyone? From a numbers perspective ESPN should kowtow/fear no one. Something doesn't seem right about that.
That's where it gets interesting and why, IMHO, ESPN may consider changing their 'ESPN' logo to the silhouette of a house of cards and their jingle to *ESPN, the world leader in sports....debt*. First, ESPN is
significantly overpaying market price for as well as contractually committing to many many billions for the rights to air top ticket sports (fyi, they recently paid ridiculously huge for NBA). Even with significantly less compelling and buzz generating NFL game matchups, they pay more than ABC, CBS, Fox per game. Second, and even more interesting about ESPN, they probably collect more money than any other fortune 500 company from consumers that do NOT use their product (as odd as that sounds it is probably true). 60% of ESPN's revenue (yes, 60%) comes from carry rights. I believe this means every single cable and satellite subscriber that has a viewing package that includes ESPN, that cable or satellite provider pays ESPN something like $5.50 per month for that subscriber (
almost 4 dollars more than the next cable station on that list). Doesn't matter one bit if you don't watch or never would watch ESPN, ESPN makes 5.50 per month from you as a cable/satellite subscriber. That's certainly great news for ESPN. Hmmm, just thinking out loud, what happens if 'cord cutting' attracts more and more people? And what happens if cable/satellite providers are forced by the changing and shrinking full package subscriber market to go a la carte? Could it affect a company who has committed many many billions because they expect to collect many billions in revenue from the compelled fee payer market that is almost sure to shrink and even transform?
I'm not saying it will happen next year, however, it sure seems clear that ESPN is a house of cards. 60% revenue due to compelled fees from a consumer pool that is or will be shrinking and uninterested in paying for channels they don't watch or want? That seems the very definition of house of cards. While it won't wipe out ESPN it will permanently chop one of their legs off.
So unless ESPN can pull off some master stroke business move where they get sports consumers to pay very significantly higher $$$ for the right to watch their games and shows as well as they are able to somehow get Internet based TV watchers to pay up quite a lot to watch the ESPN content, ESPN's revenue will drop. In the end I'll call that just desserts
